The head of the Central Bank called three conditions for rising prices in Russia

In Russia, there are three risks to rising inflation that will lead to an increase in the price level. Among them: active consumption due to fears of rising inflation in the future, an increase in the gap between wages and productivity growth, as well as the introduction of new sanctions against Russia by Western countries. This was stated by the head of the Central Bank of Russia Elvira Nabiullina.

“Three risks should be noted. First, the rapid unwinding of consumption in the face of high inflationary expectations, if the factors that hold back consumer activity weaken. Secondly, there is a shortage of workers and a lag in labor productivity growth from wage growth,” Nabiullina said during a press conference following the meeting of the Board of Directors on February 10, 2023. She also added that the rise in prices is possible due to the introduction of new sanctions by the West. The broadcast was on youtube channel Central Bank of Russia.

During the press conference, Nabiullina also said that the Central Bank of Russia would keep the key rate at 7.5%. The key rate acts as the main regulator of market relations. In particular, it depends on the level of inflation. The decision to maintain the key rate was previously taken on December 27.